Pricing and Demand for LNG in China: Consistency between LNG and Pipeline Gas in a Fast Growing Market

There are numerous LNG terminal projects both planned and proposed in the coastal regions of China where the economy has been rapidly expanding. While the Chinese government has adopted a policy of siting one such project in each coastal province, a simple calculation indicates that, with construction of only about eight LNG-receiving terminals1, each with a capacity of about 3 million tons per year, this policy would give China a total of around 24 million tons in terminal capacity. Assuming that each of these projects proceeds to the second phase and is consequently expanded to around 6 million tons, the combined import capacity would be close to 50 million tons. Such a dramatic rise in LNG imports by a single country would have substantial impacts on the international LNG market.